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Tory Priorities Are Torn Between Defence Spending And Tax Cuts

Defence Secretary Grant Shapps driving a tank (Alamy)

5 min read

A number of senior Conservative MPs are concerned that Government may not increase defence spending by enough ahead of the next election as a result of pressure from a significant wing of the party to prioritise further tax cuts in an attempt to win voters.

Against the backdrop of ongoing wars in Ukraine and the Middle East, Conservative MPs have been privately making the case that Government must set out a timetable for when the defence spending will be increased. But many MPs are desperate for tax cuts they feel they can easily sell to voters in a bid to stem significant losses at the next general election, which must be called before the end of this year.

The UK government currently commits 2 per cent of GDP to the Ministry of Defence (MoD), and Prime Minister Rishi Sunak has pledged to increase MoD investment to 2.5 per cent of GDP when the economic conditions are right. Former defence secretaries Gavin Williamson, Ben Wallace and Michael Fallon have publicly called for the party to go further and commit to spending 3 per cent of GDP. There is also pressure from MPs for ministers to set out a timetable for how the increase could be achieved. 

A cabinet minister told PoliticsHome they understood it may not be realistic to immediately boost funding for the MoD, but felt Downing Street was aware the department ultimately needed more money. 

“Most people realise we will need more, but there is a spending review next year, and there is no realistic room for more pre-election. It is a matter for the manifesto,” they said.

Some MPs were concerned there was no new announcement for the department in the Spring Budget earlier this month. Treasury aides had claimed it was not feasible to spend more money on defence due to the state of the public finances, according to the Telegraph.

“The Treasury orthodoxy line is, if you give defence more money, they will waste it. The Treasury don’t get defence and they don’t like it,” one minister told PoliticsHome.

“The reality is that when you are in incredibly challenging times, you need more of everything. However capable a bit of defence kit is, it can’t be in two places at once.”

One Tory MP, who met with Jeremy Hunt in the days leading up to the Spring Budget urged the Chancellor to give defence a significant cash injection, even if it meant less money for tax cuts.

According to the OBR, kit spending is expected to go down next year while the MoD has frozen all new capital spending for two months.

A Treasury source told PoliticsHome that when affordable, the government will increase spending to 2.5 per cent – but said the ambition very much rests on the economy.

“We backed our Armed Forces last year with an additional £11billion, and defence spending will reach 2.5 per cent of GDP when economic conditions allow,” they said.

“The best way to fund public services and our Armed Forces is to have a growing economy, which the Spring Budget will deliver through major tax cuts for working people.”

James Cartlidge, Minister for Procurement, told PoliticsHome he understood there was a “lot of political pressure” for higher spending. He believed it was “totally understandable” his colleagues wanted to see more investment in defence “given the deterioration in the international situation in recent years”.

“The best way to win a war is to deter it from happening in the first place," he said.

He added that he did not have the power to "determine the total amount we spend" on defence but would continue to ensure the taxpayer got the best value for money. "What I can influence is ensuring we get more out of what we do spend and what we've already agreed to spend."

Defence spending appears to be a key priority not only for Conservative MPs but for voters in general. 

Recent polling from YouGov suggests there has been an eight-point spike in three months from those who see it as the most important issue facing the country. 

Meanwhile polling published by ConservativeHome found three-quarters of Tory members would have preferred to see more defence spending than tax cuts in the Spring Budget.

This new global picture has also changed the domestic landscape which Tory MPs will be fighting the next election on.

One MP compared the upcoming election to the 1983 campaign – when defence was a front and centre issue, and heavily influenced the outcome. In that election, when Margaret Thatcher was Prime Minister, Britain secured victory in the Falklands War, the Cold War was coming to a close, and Michael Foot was the Labour Party opposition leader calling for nuclear disarmament.

On the doorstep Tory MPs and staffers see the issue as another weakness in the party’s strategy. One staffer, who recently campaigned in a traditional safe seat in the Blue Wall, said voters had picked up the fact that the party had nothing to say on their election leaflets.

Despondent Conservative MPs may be given some hope in the fact that senior figures in Government are known for their strong views on defence.

During Grant Shapps’s short-lived leadership campaign in 2022, the defence secretary called for the UK to commit to spending 3 per cent of GDP on defence.

James Forsyth, Sunak’s political secretary and best friend, regularly wrote for the Spectator that he wanted to see more spending on defence.

Forsyth wrote in an “ideal world, economic growth” would pay for defence spending. But since the 2008 crisis productivity has slowed and cannot be relied upon to provide extra cash for more weaponry, servicemen and women and kit spending.

He argued in its “absence there will need to be spending restraint elsewhere” – which appears to contradict the current Treasury line.

A Government spokesperson said the UK was spending a record amount on defence.

“This includes an extra £24 billion between 2020-2025, the largest sustained increase since the end of the Cold War,” they said.

“The military is protecting the UK and our allies, including on every single NATO mission, supporting Ukraine against Putin’s aggression and tackling Houthi attacks on shipping in the Red Sea.”

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